Moral hazard

Moral hazard is when someone has the opportunity to take risks because they will not suffer any consequences. For example, if you know that your parents will always bail you out of trouble, you might be more likely to do things that you know aren't right. Moral hazard can also happen in businesses and financial markets. For example, if an insurance company pays all the costs of something bad that happens, someone might be more likely to do something that is dangerous because they know the insurance company will pay for any problems.